Okay, folks. Here’s your challenge. Demonstrate that Bayh-Dole isn’t a disaster and university patent licensing practice isn’t also a disaster.
Here are some observations. Produce evidence to show they are wrong.
1. Commercialization under Bayh-Dole is 100x worse than under the private network of invention management agents it destroyed, and 10x worse than under the IPA system it replaced.
The commercialization rate under Bayh-Dole is below 0.5% at the top performing research universities, below 0.1% otherwise. Bayh-Dole has resulted in a university approach to invention management that is 100x less effective than the diverse, largely voluntary, selective agent-based approach in place prior to 1981. Or perhaps it is just 80x worse. Fuss over that, if you want. Universities claim the rate for the federal commercialization before Bayh-Dole was 4% to 5%. Universities trying to make money from monopoly positions are now doing 10x worse than the federal government was doing when the government was not trying to make money from monopoly positions. Prior to Bayh-Dole, most universities did not lose any money on patent administration because they used external agents that paid the costs. Now, most universities lose money–often public money. They are gamblers who can’t pull out, who figure the next lucrative license is only five, maybe ten years away–if they keep spending.
2. If universities had great commercialization rates, they would report them. But they don’t report them. The rates are awful.
Instead, they report metrics that show how much work they do, how much money they make, and how important they must be. This is PR. But it does not show that they are using the patent system to promote practical application. They use the patent system to promote their own activity, to exploit patent rights for money, to pad the resumes of faculty inventors, to compare themselves with others doing the same thing, hoping to show they are “excellent” and “leading” and “improving.” But none of this has anything to do with Bayh-Dole. Universities don’t report commercialization rates because they don’t care about them, and they don’t care about them because they are awful. Instead, universities have optimized to a portfolio model in which one lucrative deal a decade is all that’s needed to be successful.
3. If universities had lots of success stories, they would report the fact. They don’t. What they report is all they have. Handfuls in thousands.
And even those reports are often about a license and the potential for a product, not that a product has been created and made available to the public on reasonable terms. And there’s often no indication whether the product is based on a patent license to a subject invention. Face it, there are hardly any success stories for Bayh-Dole. In 1999, when COGR was writing up an account of Bayh-Dole’s success, it trotted out a list of inventions that were successful, making it appear these were subject inventions under Bayh-Dole. But most weren’t–weren’t under Bayh-Dole, weren’t inventions. Even the few success stories that we have appear to come about despite Bayh-Dole rather than because of it.
4. The flow of technology arising from federally supported research has been cut off and fragmented into petty domains held by universities and speculators to make demands of anyone who would use the research.
Universities patent to prevent inventors or the federal government from patenting. They stake out monopoly positions without any idea how they are going to use the patent system to promote practical application. They don’t talk to industry before filing a patent application, they don’t demonstrate that an exclusive license is necessary, they don’t grant a general license for research and internal uses. They patent in the hope of making money even where patents are not needed to promote use. They attract speculators and monopolists as business partners rather than technology users and developers. This is a terrible outcome.
5. The metrics put forward to show that Bayh-Dole is a success show just the opposite.
Bayh-Dole has created a massive bureaucracy, has diverted public resources to accumulating patent positions, has made more difficult, costly and delayed the use of the vast majority of federally supported inventions and discoveries. Bayh-Dole has made a virtue of invention non-use–well over 99% of patented university inventions fail the Bayh-Dole standard for practical application. The fact that hand-waving, non-responsive metrics are put forward in place of actual, meaningful metrics points to Bayh-Dole as a scam. The metrics are not just non-responsive; they are meant to dissuade people from learning the realities of their practice. No university deserving the public’s trust would do this. But university licensing offices have no interest in public accountability–they are too concerned with their own survival, and for that, the primary goal is to appear successful and important and moral–committed to the public welfare. It’s just that a rhetorical statement of intention is not the same thing as actions.
6. Bayh-Dole does not produce products from subject inventions faster using the patent system than otherwise.
Bayh-Dole produces practical application more slowly. Universities violate Bayh-Dole’s standard patent rights clause by assigning patents to companies under the guise of exclusive licenses. Such licenses provide few incentives for companies to accelerate practical application rather than to delay it. The companies know they can renegotiate milestone dates for development later. Universities won’t terminate unless they are forced to. There is no competition. By way of contrast, the internet is an example of a cluster of inventions made with federal support that did not require the early intervention of speculators and monopolists. Little that Bayh-Dole has produced can compare with open or standards-based innovation.
7. There are no data to back claims of Bayh-Dole’s success. This, too, is an epic failure of public policy. There is no public oversight or accountability.
Universities don’t report their commercialization rates for subject inventions. States don’t require public universities to do so. Bayh-Dole and its implementing regulations were drafted to preclude federal and public oversight. It is the perfect law for middleman welfare: the free play of middleman intellects. Bayh-Dole exempts usage reports from federal public disclosure law. Whatever data there are is kept secret.
Bayh-Dole suppresses express guidance on what constitutes reasonable licensing practice, permits universities to claim the right to own subject inventions as a matter of law (even after the Supreme Court in Stanford v Roche rejected that claim), permits universities to assign patents on subject inventions under the guise of exclusive licenses; ignores university indifference to the (f)(2) agreement; ignores invention nonuse; ignores the requirement that patents be used to promote use, not to prevent or threaten use; ignores university misuse of royalty income. March-in procedures are so narrow and so difficult that they have never been successfully used.
Bayh-Dole compliance consists of reporting subject inventions, giving notice to elect to retain title, granting the government its license, requiring substantial manufacturing in the US for exclusive licenses, and putting a government rights statement in patent applications. Anything else goes–but almost none of it is reported.
Bayh-Dole is a public law that cedes to private speculative interests research findings that would otherwise go to the public domain, to the federal patent commons, to industry on a FRAND basis, or would be developed through the personal initiative of inventors working with invention management agents and companies of their choice. Bayh-Dole’s primary success is to have created a vast, secretive, dissembling, unaccountable bureaucracy that has fragmented research findings, alienated inventors from their work, delayed and destroyed opportunities for practical application, and led universities into unmanageable institutional conflicts of interest in which money is more important than service and preventing competing opportunities is made into a virtue.
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Prove these points wrong. I double dog dare ya. I don’t think you can do it. This is not about whether universities should assist inventors with the deployment of patents. This is not about whether university licensing folk are smart, committed, diligent, and conscientious. This is not about whether there are instances of a licensing office making a bunch of money or making someone happy. And it will take more work than hand-waving and quoting an anonymous, isolated sentence from The Economist.
Let’s lay some ground rules. First, let’s stop the talking falsely.
We are talking subject inventions, promoted by the patent system, leading to practical application. Bayh-Dole makes clear that the law’s primary policy and objective is that the patent system be used to promote the practical application of subject inventions. Practical application means that a subject invention is being used, that that use can be established (i.e., publicly demonstrated), and that the use results in benefits available to the public on reasonable terms.
Five required elements–use, established, benefits, public, reasonable. To show that Bayh-Dole is successful, show that these five elements are being met time and again by means of the patent system.
Working premise: you can’t, not because you don’t have the time to gather the data, and not because the data exist but aren’t available, but because the underlying activity is not happening.
Whatever you cite, show that it is relevant, not just that it is an exercise in confirmation bias, halo effects, or consensus restatements. Just because something is published does not make it true. AUTM survey metrics, for instance, are not relevant. They do not break out subject inventions. They do not show practical application. They do not show the rate at which university patent practice leads to practical application–not by time nor by percentage of claimed inventions.
AUTM metrics conflate patentable inventions with non-inventions such as software and biomaterials. AUTM metrics conflate royalty income from sales with all other forms of royalty income. AUTM metrics define a commercialization license as any license earning more than $1,000–and the dollar amount has nothing to do with practical application.
For all that, a mere license does not imply commercialization–it implies that the licensee won’t get sued because it has paid up, and paying up is only loosely related to practical application. So a count of licenses shows how many organizations have sought to avoid getting sued to preserve a future opportunity, not how many are working to develop an invention to practical application, or how many have done so.
Furthermore, economic impact metrics have to be grounded in reality. AUTM folks take the royalties reported and times them by 20 or 50 (representing a 5% royalty or a 2% royalty) to create a big number that they claim is the total sales of product. Then they multiply this fabricated total sales by another factor to arrive at economic impact. But it is obviously not a valid approach. A university may receive $1m just for reimbursements for foreign patenting–and will report that reimbursement with its patent royalties. AUTM folks then multiply that number by 2o or 50 and claim that it must represent $20m to $50m in sales, when there’s nothing of the sort happening.
Same for upfront fees, milestone payments, license maintenance fees–all of which reflect the value of the license, not the use of the practical application of the underlying invention. Same goes for income from realized equity in a company. The company’s value may have–often has–very often has–almost always has nothing to do with the public availability of product made under a patent license to a subject invention. Multiplying realized equity has nothing to do with sales or economic impact. Finally, the amount of investment attracted to university startups also does not have to do with practical application. It has to do with the ability of principals to separate wealthy folks from their money on the premise that they will make more money sometime in the future. None of that has anything to do with the success of Bayh-Dole.
The standard for Bayh-Dole success is clear: establish the use of subject inventions with benefits available to the public on reasonable terms. One piece of evidence, then, is that inventions are being used under a patent license. A second metric is that there is a way to establish–document, demonstrate–that there are public benefits. A product for sale under the patent license is one such way. There are others, no doubt. A third metric is that the benefits are available to the public on reasonable terms–but let’s relax this constraint for now. Just show that under a patent license there’s use or a product for sale.
We can then rule out growth in university patenting, the number of patents held by universities, and anything like that. These are measures of office activity and money available to be spent in acquiring patents. The number of patents directly tracks discovery withheld from the public commons. It is a measure of the interference in the flow of published information and freedom to practice imposed by university patenting. It does not represent innovation, nor practical application, nor success. The number of patents does not measure potential for innovation, economic development, or the excellence of research. A single invention can give rise to five or ten patents–including continuations, continuations in part, divisionals, and reissues. Much of what happens is a matter of patent strategy and money. How many patents does one need to promote the practical application of a subject invention? Or do multiple patents suggest a greater interest in creating a monopoly position without respect to whether private, monopoly-based investment is necessary to develop an invention to the point of practical application? In any event, the number of patents issued is not an objective of Bayh-Dole.
We can also rule out the number of licenses granted. Without tracing these licenses to specific subject inventions, the number of licenses means nothing. A university could grant 500 licenses to a single invention and none to 499 other inventions. In fact, it appears that most universities fail to license most of their inventions. What matters is if, for each subject invention claimed by a university, there is ever practical application that meets the requirements of Bayh-Dole. The answer is, for most subject inventions, no, never.
Finally, we can disregard the money made or invested on licenses. The stated policy of Bayh-Dole is for subject inventions to achieve practical application through use of the patent system. There’s no metric that requires universities to license patents on subject inventions for a royalty. Bayh-Dole does provide that federal agencies can ask universities for how much they are making in royalties, but that is as easily a measure of whether universities are charging reasonable royalties or are in cahoots with exclusive licensees to collect monopoly rents and divide them between the speculators and the university. Money is not a measure of use. Royalties can be received in the form of upfront fees, milestone payments, patent reimbursements, equity, sublicensing fees–all of which reflect a measure of future value, but have no direct bearing on use. Royalties on sales or on metered use (as use in manufacturing) do reflect practical application, so long as there are benefits available to the public on reasonable terms.
Money, to be a measure of the success of Bayh-Dole, must be shown to be directly related to the use of the subject invention, not simply related to the exploitation of a patent position, speculation about the future value of the patent or the subject invention, and the like. Such money, if there is no use, is wasted money, or misdirected money. Universities can easily set it up so that they make money even when there is no practical application. Companies can pay to get an invention out of the way, dutifully go through some motions to develop the invention, and then abandon it when it suits their purpose. The university has made money, and there’s no time or resources to try to license the invention again. Often, there has been enough development that the company terminating the license retains blocking rights for anyone else who might try their hand at the same invention.
Bayh-Dole has been a disaster. So has university patent licensing practice. The positive evidence for disaster is there, even with Bayh-Dole making use data a state secret. Bureaucracy is way up. Patents blocking the use of university research are way up. Patent policies are draconic and non-selective–and wretchedly drafted. Non-use of subject inventions is way, way up. Huge amounts of money have been diverted to patenting. The previous network of private invention support has been destroyed. This much is clear.
So where is the evidence that all these things are worth it? Despite all the delays, waste, bitterness, and failures, show that Bayh-Dole is still successful on its stated terms. Here, I’ll help.
For each subject invention, identify a commercial product or public use that was promoted by a patent on that subject invention. How many have you got?
For each subject invention, provide an estimate of the private investment that was made to bring the invention to the point of practical application that otherwise would not have been made. Be clear–we are not talking about the fact that some one company made the investment. We are talking about whether that company would have made the investment anyway and that other companies would have also made a similar investment if they had been allowed to. Any situation involving possible infringement before practical application counts against your data–in that case, companies were making the investment despite your patent.
What is the rate of licensing? That is, number of subject inventions licensed divided by the total number of subject inventions. Do this for representative universities, or for all subject inventions. There will be lags, of course–more recent inventions might be unlicensed. So how about looking only at subject inventions for which there is an issued U.S. patent?
What is the rate of practical application? That is, what is the number of subject inventions developed to the point of practical application divided by the total number of subject inventions? This is the core metric. You want this number to be high, preferably around 25% to 30%, where it was before Bayh-Dole.
Then, for fun, you might show how many subject inventions are unlicensed relative to all subject inventions, and how many subject inventions have been licensed exclusively but cannot show practical application as a percentage of all exclusively licensed subject inventions.
I expect that the data will show that Bayh-Dole is a failure and that the dominant university patent licensing model is also a failure. Poor rates of commercialization, lots of nonuse, the only sure money being made by administrators and patent attorneys, and only by luck by anyone else–and mostly without practical application. No oversight, plenty of non-compliance, misleading reporting. But, hey, surprise me.